Electric car subsidy freeze - Car manufacturers' price war: which shares are now lucrative
The environmental bonus for electric vehicles expired on December 18 following the Federal Constitutional Court's ruling on the federal government's debt brake. Dealers and manufacturers are now concerned that demand for e-cars could collapse. Something similar has already happened in Denmark, Norway and the Netherlands after subsidies were withdrawn. Falling demand would also weigh on suppliers' share prices. The shares of German car manufacturers Mercedes, BMW, VW and Audi were already slightly down after the abrupt end of the environmental bonus.
Lucrative car manufacturer shares?
Now more and more car manufacturers are taking countermeasures and have announced that they will replace the bonus with discounts in order to maintain demand. For cars that are delivered and registered this year, Volkswagen, for example, is waiving 6750 euros for customers; for vehicles with a delivery date of 2024, VW is paying an additional 4500 euros. Tesla, BYD, Mercedes, BMW and Audi are also replacing parts of the environmental bonus under slightly different conditions.
The quick and generous price reduction could lead to a fierce price war for e-cars, as competition is growing in this future-oriented business segment and the aim is to secure market share. A look at the world's largest car market in China shows how such a price war could end. There has recently been a regular undercutting competition there, in which manufacturers with high returns on sales are clearly likely to have the upper hand.
One of these is the Chinese car manufacturer BYD, which replaced VW as the top-selling car manufacturer in China in April of this year. According to Marketscreener, the rising brand's estimated return on sales for 2023 is still an adequate six percent. With an estimated price/earnings ratio (P/E) of currently 17, the share is not too highly valued for a fast-growing company. The majority of analysts continue to rate BYD as a buy.
With a return on sales of 9.5 percent, the US electric pioneer Tesla is still well above BYD's value, so it can probably also enter another discount battle. However, with an estimated P/E ratio (2023) of 93.9, the stock is already very highly valued, even though the company has grown at an enormous pace in recent years. In any case, an investment would be a speculation on a continued Tesla boom.
VW and Tesla popular in Germany
Tesla has long been one of the most successful e-car manufacturers in Germany. 12.7 percent of new registrations between January and November 2023 were Tesla models. According to analyses, price reductions in Germany could therefore cost Tesla up to 300 million euros. This is no small matter, but it won't spoil the balance sheet either. After all, Tesla's profit in 2022 was already the equivalent of around 11.5 billion euros.
Only VW was more popular with car buyers in Germany this year. With 13.7 percent of newly registered e-cars, the German automotive group is still ahead of Tesla. The company seems less well equipped for an impending price war on the German car market: VW is carrying a high debt burden, the mass market business is already considered to have low margins and the expensive transformation into an e-car company is far from complete.
Accordingly, the share is currently valued low: VW has an estimated P/E ratio of 3.78 for the year 2023. Analysts see the average price target at 151 euros - the share price was last at 114 euros, so there is room for upward movement. Important: In contrast to Tesla and BYD, VW continues to build many vehicles with combustion engines, just like the other major German car manufacturers Mercedes, BMW and Audi. Should demand for e-cars in Germany fall temporarily, this segment could benefit once again - possibly for the last time.
This article was first published by Capital, which, like stern, is part of RTL Germany
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Source: www.stern.de
